Hot stock: Genting Singapore sheds 1.9% on heavy trading after dismissing potential deal rumours

MAINBOARD-LISTED Genting Singapore lost 1.9 per cent or S$0.015 on Monday (Jul 18) to finish the day at S$0.79, after the company said on Sunday that it is not aware of nor involved in any ongoing discussions on a potential transaction involving the company. 

The group’s shares fell as much as 5 per cent or S$0.04 in the early part of the trading session, but recovered some ground in the second half of the trading day.

Genting Singapore was the most actively traded counter by volume on the Singapore Exchange on Monday, with some 38.9 million shares changing hands.

The counter’s fall reversed a portion of its gains from the previous week. On Friday, Genting Singapore’s shares were up as much as 9.3 per cent or S$0.07 at S$0.82, before closing at S$0.805 as trading halted during the midday break.

This came after Bloomberg reported that US rival MGM Resorts International had recently approached the company’s controlling shareholder, the billionaire Lim family, to express its interest in a deal.

In its statement, Genting Singapore said Genting Berhad had received an unsolicited approach for the latter’s stake in Genting Singapore. This “has not been pursued”, Genting Singapore said.

The Genting Group, headquartered in Kuala Lumpur, Malaysia, consists of holding company Genting Berhad and its listed subsidiaries Genting Malaysia and Genting Singapore, among others.

Genting Singapore operates integrated resort Resorts World Sentosa, which features a casino, a theme park, an aquarium and a variety of shops and restaurants.

On Friday, analysts were lukewarm on Genting and its subsidiaries.

CGS-CIMB shaved its target price for Genting Malaysia to RM3.30 from RM3.40 previously on slower-than-expected revenue recovery, though it maintained its “add” call; Maybank left its rating and target price for Genting Group at “buy” and RM5.96, respectively, after its evaluation of the rumoured MGM deal. 

According to CGS-CIMB analyst Foong Choong Chen, hotels in Resorts World Genting (RWG), operated by the group’s Malaysian subsidiary, have been largely sold out for July, with healthy bookings into August.

While RWG has seen “strong pent-up anecdotal demand”, however, staff shortages and the lack of Chinese visitors, which made up 7 per cent of its total hotel guests in pre-pandemic 2019, have been somewhat hindering its recovery, he said in his report.

Its theme park SkyWorlds, meanwhile, has seen “gradually improved” ticket sales but received mixed reviews over operational kinks.

Maybank analyst Samuel Yin added that Genting Berhad would be very dependent on RWG if it were to sell its 53 per cent stake in Genting Singapore.

Genting is “deep in value”, he said as he laid out reasons the group may or may not sell its shareholding in Genting Singapore in a Friday report.

Genting Singapore contributed a huge 50 per cent to the group’s core net profit in 2019, Yin said, but the group has a history of selling its assets. 

Furthermore, the financial viability of Genting Singapore investing S$4.5 billion in Resorts World Sentosa’s planned expansion is questionable as global recession looms and competition may emerge in Thailand.

Yin said that Genting will also see an easing in its RM16 billion (S$5 billion) to RM17 billion of holding company net debt caused by Resorts World Las Vegas, if it sells its Genting Singapore shares.

Bloomberg said on Friday that though the discussions with MGM did not lead to an agreement, others have been in the preliminary stages of studying Genting Singapore.

No married deals were recorded on Monday according to data from ShareInvestor.

The casino operator’s response to the potential deal rumours was a result of a query from the Singapore Exchange Regulation about its “unusual price movements”.